Gundlach: Volatility may prompt Fed to pause taper

NEW YORK (MarketWatch) -- The Federal Reserve may have to pause the wind-down of its bond-buying program due to market volatility, bond expert Jeffrey Gundlach said Wednesday. The Fed has been winding down its $85 billion in monthly bond buys by $10 billion at each meeting, but market gyrations are likely to cause them to stop, leaving some form of easing in place at the end of 2014, the DoubleLine Capital founder said in a CNBC interview. He added that yields on the benchmark 10-year Treasury note
TMUBMUSD10Y, -3.26%
are likely to continue falling toward 2.50%. Despite a recent drop in yields, there's more demand for bonds, especially from institutional investors like pension funds. The money manager made that call earlier in the year on an investor webcast, but reiterated that yields have room to fall, despite recent drops. Gundlach also said that emerging-market dollar-denominated bonds are fairly valued, but corporate bonds are overvalued. The bond fund manager also says that he believes Puerto Rico will survive its flirtation with insolvency, but that he isn't buying its bonds. He added that Apple Inc.
AAPL, -0.87%
stock is not a particularly compelling buy and Chipotle Mexican Grill Inc.
CMG, -0.26%
stock is overvalued. The 10-year note yielded 2.76% on Wednesday.

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